The fresh suit will be filed when Richard Breeden, the former US Securities and Exchange Commission chairman hired by the company to investigate allegations of financial impropriety, completes his inquiry. It is understood Breeden is close to completing his report and could hand it to the company this week. A revised claim will be submitted soon after.
Breeden was hired by the Hollinger board after minority shareholder Tweedy Browne raised concerns about the way Black was running the company, which he controls through his private investment vehicle Ravelston.
He is accused of receiving unauthorised non-compete payments and management fees totalling $200m. Hollinger is suing Black for damages and seeking repayment of the money. Since the original writ was filed, new allegations have emerged. Breeden is investigating claims that Black effectively sold dozens of Hollinger’s smaller newspapers to himself for as little as 50 cents and then sold them on at a profit. One of those transactions allegedly netted Black and fellow executives over $750,000.
Hollinger’s amended claim will seek to recoup the money Black allegedly made from dozens of similar transactions, which it believes could run into tens of millions of dollars.
Breeden is also investigating claims that Black pocketed payments from paper suppliers in the form of discounts paid for buying in bulk. Those discounts should have been paid to Hollinger. They are also likely to be added to Hollinger’s amended claim.
Black denies wrongdoing.
Hollinger refused to comment. The company has hired investment bank Lazards to sell all or some of its assets, which include the Telegraph titles and the Chicago Sun-Times . The Barclay brothers are thought to have bid about £630m for the Telegraph titles. Daily Mail owner DMGT has tabled an offer of about £650m. KKR, the American private equity group, is believed to have bid for the whole group. Second-round bids are due in a month’s time.